Carson Block: AI Could Trigger the Next Financial Crisis
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What is the main topic discussed in this episode?
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Welcome to Merrin Talks Money, the podcast in which people who know the markets explain the markets. I am Merrin Somerset Webb. And this week, I am speaking with well-known short seller and Muddy Waters Capital founder and CEO, Carson Block. Carson, welcome to Merrin Talks Money.
Thank you. Thanks for having me.
You have been talking a lot recently about AI, and I wanted to just start on that straight away, because I think the core of your view is that AI really is going to live up to everyone's expectations of it. It is going to be spectacularly successful. All the worries a lot of people have about the way that LLMs have... hit a ceiling and development is over and we need a new path, all this kind of thing doesn't come into your view. You think that it's going to be very successful and there will be an employment apocalypse as a result. Am I over-egging your view there?
Let me just state that as background, I was a skeptic. So until February of this year, I refused to refer to any of the models that are out there that we're using as AI. They are large language models. And so I said, okay, these things are not going to ever find the cure for cancer. They are not that intelligent. It's not artificial intelligence. They're LLMs. Now, the current generation of LLMs that was released in January, early February of this year changed my mind to some extent. They're not going to independently develop the cure for cancer. I mean, I used to term them the greatest search engines ever developed, and that effectively they are. But their ability to synthesize that information and order that information, I mean, there's real labor savings to be had right now.
in certain areas of knowledge industries, I mean, such as investment. I mean, I immediately began using Claude to run Monte Carlo simulations that I previously would have needed somebody who was pretty young, recently graduated from a top university who was strong in math to run. The thing that's important to really understanding or that changed my view as to what LLMs are going to do to the labor market is that this generation was coded and tested in large part by its predecessor generation. It is coding and testing its successor generation. So... You have a situation where the leading users of this generation of AI model, I mean, they're in the technology industry, they are able to supplant by using AI or displace multiple members of a team.
Now, vast majority of us are not that skilled yet with the current generation of model, but we extrapolate that we're going to be hitting a point in the not too distant future in which we're going to see exponential improvement in the capabilities of these models because they're coding and testing their successors and so on and so forth. then you're going to see a lot more capability you're going to see more comfort in understanding of how to use them i think it's entirely conceivable that within a few years three five two um you could see within the us roughly 15 of knowledge workers displaced from their jobs and
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:00–9:20
2
What are Carson Block's initial thoughts on AI's impact?
9:20–11:07
3
How does Carson Block's view on AI differ from his previous skepticism?
11:07–26:32
4
What potential job displacement does Carson anticipate due to AI?
26:32–28:00
5
How could AI lead to a financial crisis according to Carson Block?
28:00–46:29